Cost of rail strikes mounts to £716m as taxpayers forced to support struggling industry
Industrial action has cost the rail industry £716m since the feud between unions and operators began, new figures have revealed.
According to industry analysis shared with City PM, rail strike days have wiped £716m off the sector’s already struggling finances since June last year, with taxpayers now footing a bill of £175m per month to keep the industry alive.
Commuters are currently facing fresh strikes from the train drivers’ union ASLEF today, which are intended to hit the Conservative Party’s annual conference in Manchester.
A slew of operators including Avanti West Coast, Northern, Southestern and Transpennine Express are running no services whatsoever.
Further strikes on the London Underground were also scheduled until a last minute pay deal was reached between Transport for London (TfL) and the Rail, Maritime and Transport Union (RMT) early on Tuesday afternoon.
Ahead of the action, the Rail Delivery Group (RDG), which represents train operators and provided the figures, urged ASLEF leaders to accept the currently tabled offer to avoid taxpayers and businesses facing further costs.
“There is a deal on the table for ASLEF that would take average driver salaries to £65,000 for a four-day week – that’s more than double the average UK salary.”
The Department for Transport (DfT) meanwhile argued that an offer was already on the table and accused the union of failing to put it to their members, “damaging their own industry in the process”.
But experts told City PM that it is the government which actually holds the cards, and that their close oversight of rail groups under the current contracting system is a major reason behind negotiations floundering.
One source with close knowledge of the sector’s finances told City PM that rail operators are quietly but deeply frustrated with the degree of government oversight, particularly on fiscal matters.
“The way that the National Rail contracts are designed are to try and make sure all the train operators report back to the government on every element of the cost that’s incurred,” the source said.
“The train operators can’t do anything without getting government consent… So all of this kind of rhetoric around, you know, when negotiating with the train operators essentially is all nonsense, because the train operators can’t do anything without going back to the government, there’s that much control.”
The government is currently responsible for rail operators’ cost and revenue risk, after changes to the contracting system during the Covid era.
The source argued this was a “big barrier” to resolving the dispute, as train operators had far greater flexibility prior to the pandemic to pursue agreements in line with their commercial goals.
Before new contracts were introduced, “they could look at it and say, well, we don’t want to have strikes, because we’re losing X, Y, and Z of revenue and we’ve still got all the costs to pay…. So we’ll be more pragmatic”, the source said.
The IEA’s Labour market expert Len Shackleton argued that unions were to blame in part for requesting “inflation-busting pay increases for already well-paid ASLEF drivers”, while taxpayers dish out for the network’s “stonking losses”.
But he added that under the fixed contract system with the DfT, they are “unable to negotiate properly” as train operators “no longer get revenue directly from travellers”.
“The strikes will continue until one side cracks – and I don’t think it will be railway-sceptic Downing Street.”